Assessing the financial feasibility of outsourcing

Healthcare organizations frequently outsource support services--such as housekeeping, laundry, and collections--to manage costs while maintaining or improving quality. When evaluating the financial feasibility of outsourcing, financial models can be helpful in measuring the cost to the organization of the service being targeted for outsourcing. The financial model described in this article incorporates the direct costs of the targeted service and the hidden costs incurred by other departments that contribute to the service's operations. It thus provides comprehensive financial information that can be used reach more informed outsourcing decisions.